A report into the future of BBC funding recommends increasing the licence fee in line with inflation and raising the amount of money it makes through commercial ventures, the corporation said today.

The broadcaster made the disclosure after a newspaper report alleged that a review into the organisation's funding suggested replacing the licence fee with a subscription service from 2020.

The Sunday Times said that the majority of a 12-strong centenary review set up by James Purnell, the former Labour minister turned BBC director of strategy and digital, supported the change. It also reported that the review recommended freezing the licence fee until 2020.

But a BBC spokesman said: " The report recommends that the BBC pursue a inflationary licence fee increase with greater commercial revenue. No subscription model is recommended. "

The future funding of the BBC is in the spotlight, with its charter up for renewal in 2017.

On Friday Justice Secretary Chris Grayling mooted the idea of making the non-payment of the licence fee a civil rather than criminal matter to ease the pressure on courts.

Cases of people accused of evading the £145.50 annual fee accounted for in excess of one in 10 of all criminal prosecutions last year - with 155,000 convicted and fined.

Culture Secretary Maria Miller said the proposal, backed by more than 100 MPs, was an "interesting" idea which could form part of negotiations over the renewal of the BBC charter.

BBC Director General Lord Hall last week confirmed that d igital TV channel BBC3 is set to be axed as part of the latest bout of cost-cutting at the corporation.

The channel will move online to save £50 million a year, and Lord Hall refused to rule out further cuts, including axing BBC Four.

The corporation is also aiming to make more money through a revamp of the iPlayer which will allow viewers to access paid-for programmes from a new BBC download service has been given the go-ahead.

The idea of replacing the subscription service has been raised before. Last month former Crimewatch presenter Nick Ross said that the current charter should be the last and it should be replaced with a subscription system.

Addressing a seminar discussion for the think tank Civitas, he said: "The licence fee has just reached the end of its natural lifespan. It's already 88 years old and she will be well into her 90s by the time of charter renewal."

At the time the BBC said a subscription model would lead to " more expensive fees paid for by fewer people".